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Which statement below is true about the $75 Peter and his wife occasionally spend for two meals and drinks at a Korean barbecue restaurant since Peter was promoted, if the income elasticity for the expense
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Which statement below is true about the $75 Peter and his wife occasionally spend for two meals and drinks at a Korean barbecue restaurant since Peter was promoted, if the income elasticity for the expense is 2?

a. It is a substitute.
b. It is a luxury good.
c. It is a complement.
d. It is an inferior good.

User Voskanyan David
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1 Answer

10 votes

Answer:

b. It is a luxury good.

Step-by-step explanation:

Income Elasticity = 2

The Income Elasticity > 1. So, it is luxury goods. In economics, income elasticity for luxury goods is greater than 1 (i.e. Income Elasticity > 1). So option b is correct.

User Heuristic
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